Opportunities in Cross-Border eCommerce - Thomas Baldry Senior Vice President Global Mail Germany
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Thomas Baldry Senior Vice President Global Mail Germany Opportunities in Cross-Border eCommerce 14th Königswinter Seminar on Postal Economics Königswinter, 26th November 2013
A bright Future?
Mega-Trends impacting postal markets
digital
eSubstitution
physical
Mail Parcel
eCommerce
Thomas Baldry, Opportunities XB eCommerce | Königswinter | 26th November 2013 2
Any Strategy ?
We are the postal service for Germany and …
Internationalisation
Dialogue Diversification
Parcel
Physical letter e-commerce
Thomas Baldry, Opportunities XB eCommerce | Königswinter | 26th November 2013 3
Which Services?
… keep increasing our service range
digital
www.dhleasygermany.com
FUNCARD
HANDYPORTO
physical
Mail Parcel
Thomas Baldry, Opportunities XB eCommerce | Königswinter | 26th November 2013 4
Any Options?
Postal Operators face multiple challenges
Challenges
How to stay profitable in a declining market with increased
competition and rising labour cost?
Where and how to invest for a sustainable future?
Strategic Options
“Defend”
Protect market position
Focus on physical mail and direct marketing
“Transform”
Develop new services
“Grow”
Enhance product offer
Focus on new customer segments
Enter new markets
Thomas Baldry, Opportunities XB eCommerce | Königswinter | 26th November 2013 5Drivers for Cross-border eCommerce (I)
International B2C shipments provide tremendous potential
EXAMPLE: France
Availability: Only
28% 72%
available abroad
×47% ×53%
Price: At least 10%
34% 38%
cheaper abroad
Attractiveness:
62% 38%
Only available abroad
or at least 10%
cheaper abroad
Of 100 typical e-commerce products,
62 are only available or at least 10%
cheaper if bought outside of France
Source: DP DHL, B2C Parcel International
Thomas Baldry, Opportunities XB eCommerce | Königswinter | 26th November 2013 6Drivers for Cross-border eCommerce (II)
Potential is huge but consumers still reluctant to order abroad
Structural shift from offline to online
Supply chain optimizations (e.g. regional/global warehousing)
Better availability of products & cheaper price of products
European Study1) shows that in all but two EU countries,
more than half of products should be purchased from abroad
as products are only available abroad or at least 10% cheaper abroad
0% 50% 100%
Belgium
Portugal
Only available abroad
Greece or at least 10%
Finland cheaper abroad
Ireland
Italy
Today, only 9% of
Spain online shoppers buy
Czech Republic
Sweden
something abroad
Hungary
France
Poland
Austria Products available
Netherlands and cheaper
Germany domestically
United Kingdom
Source: Deutsche Post DHL – B2C Parcel International; European Commission; 1) Study compared availability and price for 100 typical e-commerce products, e.g. clothes, shoes and
accessories, electrical household appliances, electronic equipment, household goods, computer hardware and software, books, films and music
Thomas Baldry, Opportunities XB eCommerce | Königswinter | 26th November 2013 7Drivers for Cross-border eCommerce (III)
E-commerce booming thanks to recent changes at eTailers,
consumers, and logistics providers
eRetailers: Improved offers Consumers: More
Ease of use (navigation, BOOM! confidence
presentation, order
process) Faster internet
Professional appearance, Lower communication
online brands Logistics: Better performance costs
Broader product range and More transparency on Online anyway
specialization shipment status Experienced in online
New services (auctions, Faster, more reliable shopping
customized products, …) New delivery options More trust in e-commerce
Pricing Methods (Packstation, …) Word of mouth
New services: Returns
Driven by technological and marketing developments
Thomas Baldry, Opportunities XB eCommerce | Königswinter | 26th November 2013 8eTailers Face High Consumer Expectations (I)
What Does the Consumer Expect?
General expectations Specific requirements Shipping solutions
“I want the delivery of my High security
expensive iPad as safe as (insurance & POD)
Consumer possible” eTailer
“Tomorrow is my wedding Time definite
anniversary; I need the
present as fast as possible”
Appropriate delivery time
“The book should be
delivered fast; but
I want … nevertheless, the delivery Basic insurance
(EUR ~500)
• No shipping costs should be inexpensive”
• Convenient return “I do not care if I receive the
Weight based pricing
possibility trousers in two or three
days”
• Faster delivery time No insurance
“The costs for the DVD were
• More transparency only 5 Euro; therefore I want a
(exceptions possible)
and control cheap shipment of less than
2 Euro” Label to be provided to
• Better ease of use consumer; drop-point
• Lots of delivery “I want an appropriate return
possibility in case the dress Characteristics and services
options does not fit” analog to “deferred” parcel
Shipping is increasingly defined by recipients
Thomas Baldry, Opportunities XB eCommerce | Königswinter | 26th November 2013 9eTailers Face High Consumer Expectations (II)
Serving in a Complex Market Environment
Regulatory & Legal Requirements
EU – Greenbook
Security / Cybercrime
Data privacy
Customs / VAT
Consumer Requirements Operative Requirements
Marketing services Last mile delivery options
Single sign-on Warehousing and fulfillment
FLC calculator Cross-border shipping
Payment services Customs / tax management
Insurance and certification Returns solutions
Anonymous shopping
Customer service
Thomas Baldry, Opportunities XB eCommerce | Königswinter | 26th November 2013 10A Competitive Landscape?
eTailers able to pass pressure on to logistics providers due to
increasing competition in parcel delivery
Local Post
Consumer eTailer Local players
B2B & more
Express-Integrators
Consolidators
Marketplaces
Thomas Baldry, Opportunities XB eCommerce | Königswinter | 26th November 2013 11Barriers for Cross-border eCommerce
Several barriers hold back the potential of cross-border eCommerce
2 Legal framework Make it mandatory for e-retailers to
1
accept orders from any EU country
1 Order placement
Push transparency on consumer
4 Language 2
rights, liability, return policies, …
5 Payment
Simplify tariffs and taxes to facilitate
Consumer eTailer 3
imports from non-EU countries
6 Transportation & Return
4
English and “Google Translate” will
get consumer quite far
5
Plenty of payment options for
payments within the EU available
3 Tariffs & taxes
Non-EU
eTailer 6
Competitive pan-European parcel-
and return-network progressing
Thomas Baldry, Opportunities XB eCommerce | Königswinter | 26th November 2013 12B2C parcel customer needs
In terms of product features, seven customer needs have the high priority
1 Competitive Selling Price
Key product features
2 Convenient Return Solution
3 Coherent Track & Trace
4 Appropriate Transit Times with high Reliability
5 Easy Shipping Preparation
6 Helpful and instant Customer Service
7 Transparent & sufficient insurance / liability
Thomas Baldry, Opportunities XB eCommerce | Königswinter | 26th November 2013 13Need for Speed – Example Alibaba Group
Alibaba Group launched China Smart Logistics Network (CSN) on May 28
• CSN aims to become backbone of country’s USD 190bn
e-commerce market
• Network will be able to deliver shipments to any city in China
within 24 hours
• Backed by about USD 16.3bn in funding and slated for
completion in 8 to 10 years
• CSN will provide third-party couriers, warehouses, shipping and
other services, as well as analytics to help vendors improve
shipment speed and reduce costs
Big players in eCommerce do not wait for logistics/postal companies to provide solutions.
They create their own solutions.
Thomas Baldry, Opportunities XB eCommerce | Königswinter | 26th November 2013 14So ?
All benefit from growing parcel business and rapid growth in eCommerce.
But are networks ready?
Cross-border eCommerce will multiply
Parcel delivery increasingly determined by Consumers
eTailers demanding more service, but do not want to pay more
Consumers will not always realise that they buy abroad
Innovative solutions key differentiator for delivery competition
Significant Investments
!
Hardware
Software
Marketing
and People
Thomas Baldry, Opportunities XB eCommerce | Königswinter | 26th November 2013 15THANK YOU !
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